The cost of remittances might continue to descend according to a November 2005 report from the Inter-American Development Bank, but Georgia’s undocumented immigrants might also be required to pay more to send money back home starting in 2007.
Last week, the Georgia House of Representatives approved HB 1238 (The Illegal Immigration Fee Act), which would require undocumented immigrants to pay a 5 percent tax on foreign money wire services.
“My constituents have been concerned about the situation of illegal immigrants using the resources of the community in terms of education, health care and other services funded by government,” said Rep. Tom Rice (R-Norcross), chief sponsor of the bill. “There is other legislation aimed at restricting benefits to undocumented individuals. I thought this (HB 1238) would be a different view.”
Although Rice admitted that undocumented individuals do contribute to the local and national economy, he said that this does not mean they are here legally and pay taxes like the rest of the population.
“This is just a way for those people to kind of pay back one way or another,” he said.
Thirteen senators, eight Republicans and three Democrats on the Banking and Finance Committee of the Georgia House of Representatives now have the task of evaluating the bill.
One of them, state Sen. Steen Miles (District 43), who represents areas such as Conyers, said the measure is “patently discriminatory;” adding, “I am opposed to it, and if it reaches the Senate I will vote against it. Immigration issues have to be settled on a federal level.” She declined to comment further on the matter.
MORE OBSTACLES THAN BENEFITS?
A report from the Multilateral Investment Fund revealed that more than 60 percent of U.S. residents send remittances on a regular basis, while another 10 percent do so occasionally.
Two-thirds of those who send remittances do so about once monthly, and newly arrived immigrants send money more frequently. Most money wires average between $200 and $300.
The MIF informed that Western Union and MoneyGram are the most popular agencies used for remittances, noting 70 percent of the population using their services.
A Western Union representative said the company has adopted a policy of cooperating with government agencies and regulations on all levels to ensure that the system keeps functioning and transactions remain secure.
“We appreciate the challenges currently faced by the state of Georgia and others, including a growing need to fund indigent health care. We also recognize the significant efforts of this bill’s sponsors to generate creative solutions to a complicated issue,” the representative said.
After meeting with business owners to discuss the matter, Rice said he realizes they “aren’t jumping up and down with happiness over this proposal” but they recognize their corporate responsibilities. He added that the money regained from the tax would serve to fund medical services for the underserved.
However, the Western Union representative rebutted, “Western Union’s chief concern is that the bill, as it stands today, may create more obstacles than benefits. Western Union and other licensed and regulated means of money transfer play a critical role in our nation’s security. Money transfer businesses are required to monitor transactions, check the names of senders and receivers against government watch lists, and to report suspicious activity,” the representative said.
“Further complication or taxation of money transfer transactions may drive transactions underground to unlicensed and unregulated channels, creating greater risk for consumers and less visibility for government and law enforcement.”
The representative added that remittance services operate within a complicated network of licensees that include supermarkets whose employees are neither government agents nor police officers and have no training regarding the broad range of residency and immigration processing rules in the United States.
“Due to the complicated nature of these programs, requiring customer service representatives to determine at the point of sale whether or not an individual is a legal or illegal resident of the United States is a difficult proposition at best. Western Union believes that establishment of legal residency is a responsibility that lies with law enforcement or other government agencies, not the private sector.”
From another perspective, even though the Georgia Department of Banking and Finance must adopt the legislation if it is passed, Leslie Bechtel, the deputy commissioner for legal and consumer affairs, said there is concern as to how this bill would fit in with already existing legislation on remittances.
“We would have to do a lot more in our examination to ensure that people were complying with this,” Bechtel said. “It would require more resources for us to do that. In addition we don’t know how the money would be collected, but we’ll do whatever the legislature tells us to do.”
Business owners like Eugenio Martinez, the regional manager of the southeastern United States for Bancomercio Inc., a Salvadorian money transfer company that is a subsidiary of Scotiabank of Canada, have opted to set up shop in Georgia and in cities like Charlotte, N.C., due to the size of the local immigrant community. Martinez disagreed with Rice’s stance of the 5 percent fee being reasonable and said the tax is extreme.
“Five percent seems to me to be too high,” Martinez said. “The truth is these people are working, and on a certain level they do contribute to the economy through the sales tax. One way or another they do contribute. These transactions will be made more difficult, and it’s an excessively arbitrary bill that doesn’t resolve the problem.”
Martinez said that the tax could cause people to send smaller remittances, which would cause administrative costs to increase. Creative Hispanics would probably end up getting a friend with legal status to send money for them.
Martinez added that in one of the biggest remittance markets – which includes Virginia, Maryland and Washington, D.C. – only 20 percent of remittances are sent by undocumented immigrants, and therefore, most people who use these services have legal status.